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What is carla net profit in usd

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Reference no: EM133080687

Question - Carla works for CIBC Currency Funds in Toronto. She believes the Canadian dollar (C$) will appreciate versus the U.S. dollar over the coming 90 days. The current spot rate is CAD1.28/USD. Carla may choose between the following options: Each option contract will exchange USD1,000 or its equivalent CAD value.

Option

Strike Price

Premium

Put on USD (allow the option holder to sell USD at strike price)

CAD1.25/USD

CAD0.004/USD

Call on USD (allow the option holder to buy USD at strike price)

CAD1.25/USD

CAD$0.003/USD

Required - What is Carla's net profit (including premium) in USD if she buy the 100 call contracts on C$ and the ending sport rate is CAD1.28/USD?

a. 2700

b. -300

c. 27

d. 3000

Reference no: EM133080687

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